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#Apple decision by #GCEU a boon for Irish government

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The news that the General Court of the European Union (GCEU) has let Ireland off the hook for not forcing computer giant Apple to pay €13 billion in outstanding taxes, is a major relief for the Irish government. As Ken Murray reports from Dublin, the decision, bar a successful appeal, is likely to make Ireland a magnet for major multi-national corporations.

The decision on 15 July by the General Court of the European Union to rule against an EU Commission request to recover €13bn in outstanding taxes is a major blow to Brussels bureaucrats who are keen to have a level playing field across Europe when it comes to taxation on foreign corporations.

Not surprisingly, the GCEU decision was greeted with smiles in Dublin where the Finance Minister Pascal Donohue, who was recently elected chairman of the Eurogroup of ministers, said the decision clearly vindicated Ireland’s independent taxation regime: This long-running court battle has caused reputational difficulty but the ruling that Ireland did not give Apple illegal state aid will lead many to reassess their view of our corporation tax regime and of the statements that have been made about it.

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"For the moment Ireland is off the hook and Apple Corporation can continue to generate millions of euro in revenue from its lucrative operation in the ‘Emerald Isle.”

The case arose from the European Commission's 2016 instruction to Ireland to recover €13.1bn in unpaid taxes from Apple for the period between 2003 and 2014, which includes interest in alleged unpaid taxes and had been stored away in an escrow or independent account for the past two years after the Commission ruled that the altering of tax rates to benefit Apple amounted to state aid which is prohibited.

If the Ireland and Apple case was defeated, the financial hit and reputational damage could have been detrimental for the Irish economy.

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With a corporation tax rate of 12.5%, the second lowest in the EU after Hungary on 9%, the English-speaking highly educated Irish who use the Euro currency, have been hugely successful in attracting major US corporations to set up their European HQs in Ireland.

Companies like Microsoft, Apple, Linkedin, eBay, Paypal, Facebook, Twitter, Coca-Cola etc who have significant operations in Ireland employing close on 200,000 staff, watched the outcome of this case very closely.

A ruling against Apple and Ireland could have forced the Irish Government to alter its tax arrangements to bring it more in to line with mainland EU states which in turn could discourage future foreign direct investment.

Speaking after the ruling the Irish Department of Finance was adamant that its arrangement with Apple was entirely within the law. "Ireland has always been clear that there was no special treatment provided to the two Apple companies - ASI and AOE. The correct amount of Irish tax was charged... in line with normal Irish taxation rules," it said in a statement.

"Ireland appealed the Commission decision on the basis that Ireland granted no state aid and the decision today from the court supports that view."

Apple said it was pleased that the court has annulled the commission's case.

"This case was not about how much tax we pay, but where we are required to pay it," it said in a statement.

Not everybody in Ireland was happy with the ruling. Pearse Doherty, Finance spokesperson for Sinn Fein, told RTE Radio that the ruling meant Apple could make millions and pay relatively nothing to the Irish economy.

“The [specific] Apple taxation rate in Ireland of 0.005% means that for every €1 million profit that they made, the law in Ireland allowed them to pay €50 of tax.”

Unless a future appeal by the EU Commission is successful, Ireland’s Industrial Development Authority is likely to take full advantage of the Apple ruling to lure other foreign investors in to the Country.While in theory, that will bring many benefits to Ireland, other EU states may have to be more creative with their finances to attract foreign investors who will be much sought after in the years ahead now that unemployment looks set to soar in the post COVID-19 period.

European Commission

NextGenerationEU: European Commission disburses €231 million in pre-financing to Slovenia

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The European Commission has disbursed €231 million to Slovenia in pre-financing, equivalent to 13% of the country's grant allocation under the Recovery and Resilience Facility (RRF). The pre-financing payment will help to kick-start the implementation of the crucial investment and reform measures outlined in Slovenia's recovery and resilience plan. The Commission will authorise further disbursements based on the implementation of the investments and reforms outlined in Slovenia's recovery and resilience plan.

The country is set to receive €2.5 billion in total, consisting of €1.8bn in grants and €705m in loans, over the lifetime of its plan. Today's disbursement follows the recent successful implementation of the first borrowing operations under NextGenerationEU. By the end of the year, the Commission intends to raise up to a total of €80 billion in long-term funding, to be complemented by short-term EU-Bills, to fund the first planned disbursements to member states under NextGenerationEU.

The RRF is at the heart of NextGenerationEU which will provide €800bn (in current prices) to support investments and reforms across member states. The Slovenian plan is part of the unprecedented EU response to emerge stronger from the COVID-19 crisis, fostering the green and digital transitions and strengthening resilience and cohesion in our societies. A press release is available online.

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Cyprus

NextGenerationEU: European Commission disburses €157 million in pre-financing to Cyprus

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The European Commission has disbursed €157 million to Cyprus in pre-financing, equivalent to 13% of the country's financial allocation under the Recovery and Resilience Facility (RRF). The pre-financing payment will help to kick-start the implementation of the crucial investment and reform measures outlined in Cyprus' recovery and resilience plan. The Commission will authorise further disbursements based on the implementation of the investments and reforms outlined in Cyprus' recovery and resilience plan.

The country is set to receive €1.2 billion in total over the lifetime of its plan, with €1 billion provided in grants and €200m in loans. Today's disbursement follows the recent successful implementation of the first borrowing operations under NextGenerationEU. By the end of the year, the Commission intends to raise up to a total of €80bn in long-term funding, to be complemented by short-term EU-Bills, to fund the first planned disbursements to member states under NextGenerationEU. Part of NextGenerationEU, the RRF will provide €723.8bn (in current prices) to support investments and reforms across member states.

The Cypriot plan is part of the unprecedented EU response to emerge stronger from the COVID-19 crisis, fostering the green and digital transitions and strengthening resilience and cohesion in our societies. A press release is available online.

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Belgium

EU Cohesion policy: Belgium, Germany, Spain and Italy receive €373 million to support health and social services, SMEs and social inclusion

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The Commission has granted €373 million to five European Social Fund (ESF) and European Regional Development Fund (ERDF) operational programmes (OPs) in Belgium, Germany, Spain and Italy to help the countries with coronavirus emergency response and repair in the framework of REACT-EU. In Belgium, the modification of the Wallonia OP will make available an additional €64.8m for the acquisition of medical equipment for health services and innovation.

The funds will support small and medium-sized businesses (SMEs) in developing e-commerce, cybersecurity, websites and online stores, as well as the regional green economy through energy efficiency, protection of the environment, development of smart cities and low-carbon public infrastructures. In Germany, in the Federal State of Hessen, €55.4m will support health-related research infrastructure, diagnostic capacity and innovation in universities and other research institutions as well as research, development and innovation investments in the fields of climate and sustainable development. This amendment will also provide support to SMEs and funds for start-ups through an investment fund.

In Sachsen-Anhalt, €75.7m will facilitate cooperation of SMEs and institutions in research, development and innovation, and provide investments and working capital for micro-enterprises affected by the coronavirus crisis. Moreover, the funds will allow investments in the energy efficiency of enterprises, support digital innovation in SMEs and acquiring digital equipment for schools and cultural institutions. In Italy, the national OP ‘Social Inclusion' will receive €90m to promote the social integration of people experiencing severe material deprivation, homelessness or extreme marginalisation, through ‘Housing First' services that combine the provision of immediate housing with enabling social and employment services.

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In Spain, €87m will be added to the ESF OP for Castilla y León to support the self-employed and workers who had their contracts suspended or reduced due to the crisis. The money will also help hard-hit companies avoid layoffs, especially in the tourism sector. Finally, the funds are needed to allow essential social services to continue in a safe way and to ensure educational continuity throughout the pandemic by hiring additional staff.

REACT-EU is part of NextGenerationEU and provides €50.6bn additional funding (in current prices) to Cohesion policy programmes over the course of 2021 and 2022. Measures focus on supporting labour market resilience, jobs, SMEs and low-income families, as well as setting future-proof foundations for the green and digital transitions and a sustainable socio-economic recovery.

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